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JNI Corp. Closes in on Its New CEO

JNI Corp. Closes in on Its New CEO

Peregrine’s Board Down to Five Members as Ex-Exec Larry Garlick Resigns

CYBERBUCKS by Mike Allen, Senior Staff Writer

JNI Corp., a San Diego-based maker of hardware and software for data storage area networks, said it has identified “a number of solid candidates,” for its new CEO and expects to name that person by the end of the current quarter.

Former CEO Neal Waddington was forced to resign in May after the company revealed he entered into a previously undisclosed side agreement with a customer that led JNI to restate its fourth- and first-quarter financial results.

In announcing its second-quarter results last week, JNI said it has undertaken a realignment of the company that will result in cutting 15 percent of its staff, or 29 workers, from a total of 195 employees. CFO Gloria Purdy said the company will likely take a charge of about $500,000 because of layoffs.

For its second quarter, JNI reported a net loss of $8.7 million on sales of $10.9 million, compared to a net loss of $7.9 million on sales of $23.1 million in the second quarter of 2001.

As of June 30, JNI had $108.7 million in cash and short-term investments. Translated on a per-share basis, that comes to $4.10.

Because JNI stock has been trading below that figure for months (it closed $2.81 on July 31), analysts questioned the firm’s decision not to repurchase shares. Also, some analysts were clearly disturbed by management’s refusal to provide future projections on revenues and earnings.

Interim CEO John Stiska said it wasn’t an appropriate time to give future guidance, although the firm may do so “after a quarter or two.”

Included in JNI’s quarterly report was $3.2 million in charges for “lease impairment.” The company said it has been unable to sublease a 57,000 square foot building next to its UTC headquarters because of a soft real estate office market.

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Director Down: Larry Garlick, who headed up Peregrine Systems’ Remedy unit, resigned from his job and Peregrine’s board recently, leaving only half of last year’s 10 board members remaining at the embattled software firm.

In his resignation, Garlick cited differences with the company’s strategic direction, and unhappiness with not being given greater autonomy to operate Remedy. Garlick, according to industry sources, is attempting to arrange a management buyout of Remedy, which Peregrine purchased last year for about $1 billion in stock and cash.

Peregrine’s remaining directors are John Moores, who is chairman; Chris Cole, one of the founders; Charles Noell; William Savoy; and Thomas Watrous. Recently appointed CEO Gary Greenfield rounds out the board.

In other news, Peregrine’s stock is still traded on Nasdaq despite a delisting notice last month. Peregrine challenged the delisting in a July 25 hearing, but hasn’t heard yet whether it will remain. If not, shares will be traded on OTC pink sheets.

The recent stock market spike had little impact on Peregrine, which has been losing ground as news of its difficulties piles up. It dropped below a dollar in late June, was at 50 cents in mid-July, and hit a new low of 24 cents at the close July 31. About a year ago it was above $29.

On the real estate front, Peregrine’s fifth building at its Carmel Valley campus is nearing completion, but it won’t be occupying it. It’s working with Orange County developer Kilroy Realty Corp. to find a tenant.

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Return To Profit: Cohu Inc., the Poway-based maker of semiconductor testing equipment, returned to making money for its second quarter ended June 30. It reported net income of $822,000 on revenues of $38.3 million, compared to a net loss of $2.8 million on revenues of $29.3 million.

Cohu predicts current quarter revenues to be about the same as Q2, and that breaking even “will be a difficult challenge.”

Cohu closed at $16.65 on July 24, but has dropped since then. It has ranged between $13.05 and $30.65 over the past 52 weeks.

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Quarterly Loss: Maxwell Technologies, the local maker of industrial power supplies and components, reported a second-quarter net loss of $9.4 million on revenues of $13.2 million, compared to a net profit of $19.6 million on revenues of $20.5 million in sales for the like period in 2001.

The company didn’t reveal how many workers would be laid off as it downsizes its operations here and in Europe, but the layoffs will occur in this quarter. Maxwell also completed the acquisition of a Swiss company, Montena Components, Ltd., intended to strengthen its market position for its products in Europe.

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Reassessment: Science Applications International Corp. changed the previously set quarterly price for its stock, cutting $4.13 from the original price set July 12.

The initial price of $33.03 was “reassessed” after the locally based engineering and research firm said a change was needed in light of severe price declines by similar public tech firms such as Computer Sciences Corp. and EDS.

The initial price set by the board was only a 0.1 percent decline from the previous quarter, while the new price, $28.90, is 12.6 percent below the previous quarter. SAIC stock is held by current and former employees, and can only be traded internally once a quarter.

Its price takes into account continuing business operations, the value of its investment portfolio, and market values of similar firms.

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SYS Moves: SYS Technologies, a San Diego-based engineering consulting firm traded over the counter, relocated to larger offices in Kearny Mesa.

It recently said it obtained contracts totaling $2.8 million from the Navy’s Sea Systems Command for research, testing, system engineering and other services to be performed at SYS’s East Coast operations in Virginia.

Additionally, the firm said it received $600,000 in funding on a system engineering and integration contract it has with SAIC, bringing the total funding to $2 million for the first nine months of this year.

– – –

Fair Sale: Shareholders of both San Diego-based HNC Software and San Francisco-based Fair, Isaac, gave their blessing last month to the acquisition of HNC, which is planned to close this quarter.

Send high-tech finance news to

mallen@sdbj.com.

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